Science-based business strategies are the best kind, and I enjoy both creating and sharing them. That led me to write Brainfluence: 100 Ways to Persuade and Convince Consumers with Neuromarketing (Wiley, 2011) as well as my blog Neuromarketing. My new book (Summer, 2015) will be The Persuasion Slide. I'm all about practical applications, not theory. I’m the founder of Dooley Direct, a marketing consultancy, and I co-founded College Confidential, the leading college-bound website. That business was acquired by Hobsons, a unit of UK-based DMGT, where I served as VP Digital Marketing and continue in a consulting role. I spent years in direct marketing as the co-founder of a successful catalog firm, and before that directed corporate planning for a Fortune 1000 company. You can learn more about me and my speaking at RogerDooley.com. Follow me on Twitter at @rogerdooley.

Did Maker's Mark Commit Brand Suicide?

For the last few days, the world of whiskey has been buzzing about the decision to cut the proof of Maker’s Mark bourbon from 90 proof to 84 proof. [UPDATE: After several days of public flogging, Maker's Mark has reversed its decision to water down its signature bourbon.] In an interview, the distillery’s chairman emeritus, Bill Samuels Jr., said that they had erred in their sales forecasts and diluting the bourbon was the best way to meet demand.

What Samuels is saying, in essence, is, “We’re selling all the bourbon we have, so to increase unit sales we’re going to water it down a little.”

Our customers won’t notice It gets worse. Samuels goes on to say that Maker’s Mark customers won’t notice the difference. That may be a true statement for most customers, particularly those that drink their bourbon in cocktails. Indeed, Samuels says their professional tasters couldn’t tell the difference, though he didn’t elaborate on the tasting procedure. The problem with this is saying that the customers won’t notice.

Do you really want to go on the record as saying the palates of your customers are so unrefined that they can’t tell the difference when the whiskey is diluted? In reality, in blind taste tests most people probably can’t tell the difference between similar colas, beers, whiskeys, etc. Nevertheless, brands still strive to maximize their taste differentiation. Can you imagine Coke saying, “We could change our formula a little, or even put Pepsi in our cans, and not many of our customers would notice.”?

A Missed Opportunity Maker’s Mark could have used their looming shortage as an opportunity to make their brand stronger. If they encountered sporadic shortages for a period of years, they could raise prices and leverage the scarcity to take the brand up a notch in prestige.

Knob Creek Advertises Shortage

That’s exactly what Knob Creek, also part of Beam, Inc., did when they faced the same problem as Maker’s Mark a few years back. Did they water down their whiskey? Did they stop advertising (the product was sold out anyway) to boost profits? No – instead, they leveraged multiple psychological triggers by advertising the shortage (see Scarcity in Action).

First, they used scarcity – our brains prefer scarce things, even when they are identical to the same items in larger supply. Second, Knob Creek attributed the shortage to customer demand exceeding the limited supply, invoking social proof. And, in the process, they did some old-fashioned product pitching, saying, in effect, “Our product takes years of hard work to produce, and we’re not going to take any shortcuts.”

Maybe I’m not Maker’s Mark target market – even before this fiasco, I preferred Knob Creek (or Elijah Craig) – but it seems to me that Maker’s Mark took absolutely the wrong approach to their product shortage, and compounded that failure with terrible messaging.

What do you think – will this blow over in a week or two? Or has permanent damage been done to the brand? (And, for you bourbon enthusiasts, what’s your favorite?)

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I can see where this could capture “aspirational buyers”, I still question the amount of risk involved to accomplish that. Another concern is does that particular Mercedes model become a “gateway” vehicle into luxury brands in general? Additionally, I have a few friends who own luxury vehicles – BMW, Mercedes, Lexus – and they know almost every model, year, series, etc. They never hesitate to point out a “cheap” model. People buying those vehicles understand the prestige of both the model/series and brand. An entry level vehicle cheapens both in that regards.

While I realize this is off-topic, I enjoy hearing your insights and discussing the similarities and issues regarding the branding implications.

Agree, hosed, your take is the same as that of most bourbon drinkers who hear about the change. Nothing wrong with an 18 year old Scotch, either, though you won’t find it on the same shelf as Maker’s Mark!

It is very disappointing and very indicative as to what is going on in the spirits industry. It is the reason the craft beer, and craft spirit industry is rising. There is no longer any sense of pride or regard of quality in the corporate profit world. I just hope that there is some regulation to how much bullying these corporate giants will be allowed to beat down on the small craft spirit makers. It’s not that Markers Mark is the only Bourbon or the finest. It’s about what built it, the brand. It’s a very good product for a fair price. It’s company’s like this, companies that were built on pride and reputation, that is the hardest to take. We expect Walmart to take lowest common denominator, not a company like Makers Mark. It’s the watering down of America.

There’s definitely a parallel with the beer industry, Chris, where some recipes that haven’t changed in decades have been altered to use cheaper ingredients. That seems to have been more under the radar, perhaps because people are less worked up about the formula for a mass market beer than a premium whiskey.

This reminds me of a commercial by Mercedes during Super Bowl for a car starting around 30k. I am not a Mercedes owner, but this immediately cheapened the brand itself for me. Mercedes is a luxury item and not meant for everyone or just anyone. Maker’s drinkers are like Mercedes owners, they both take pride in the brand. As stated by many others – this cheapens the brand and insulting to its consumer base.

Extending a premium or luxury brand at the low end is always tricky. Some brands use different branding for their low end offerings. The risk is cheapening the brand. On the other hand, capturing aspirational buyers on their way up can build brand loyalty.

Diluting an existing product is a risky strategy. Kind of like BMW saying, “We’re not selling enough 3-series cars, so we’re taking out some steel and features to drop the price.” Not a good idea.

I can see where this could capture “aspirational buyers”, I still question the amount of risk involved to accomplish that. Another concern is does that particular Mercedes model become a “gateway” vehicle into luxury brands in general? Additionally, I have a few friends who own luxury vehicles – BMW, Mercedes, Lexus – and they know almost every model, year, series, etc. They never hesitate to point out a “cheap” model. People buying those vehicles understand the prestige of both the model/series and brand. An entry level vehicle cheapens both in that regards.

100% agree with you. A double missed opportunity by not turning this situation into a brand positive and then compounding the problem by cheapening, diluting and taking advantage of its customer base. Whether they can taste it or not, perception is reality in the wine and spirits world.

Not only does the press release really sling some mud at the customer base of Maker’s Mark, the follow up email from the Samuels is just as disturbing when they admit they were unable to predict the demand for bourbon. Why is this disturbing? Because they had properly predicted the increased demand when they were owned by Allied-Domecq in 2005.

A-D had already spent $18 million on an expansion and were ready to begin construction on a third distillery on site at Lorretto. Before the work could commence Fortune brands (now Beam Inc) bought out Allied-Domecq and never started production on the third distillery. Essentially, Beam dropped the ball on the expansion and landed them in this situation.

As a result, the Samuels family have to play the role of fools when they aren’t. They had predicted the increased demand were ready to expand and Beam mothballed it. They had a definitive plan to prevent such a drastic action and PR disaster but instead the board at Beam is forcing their hands into the fire of public anger.